Effective Segmentation Can Maximize Catalog Results

Direct mail expenses keep increasing each year. It’s crucial that your catalogs reach the right audience and generate profitable revenue. One of the most effective ways to do this is through strategic segmentation.

Catalog segmentation involves grouping your customer database into distinct segments based on relevant variables. By dividing your file into these distinct groups, you can tailor your direct mail campaigns to meet specific needs. Using this strategic approach often means you can mail fewer catalogs, yet reach a more engaged customer and generate higher response rates and profits.

Effective segmentation strategies target customers with direct mail pieces that align closely with their demographics, purchase history, or browse behavior. There may be situations where RFM (recency, frequency, monetary) is no longer enough to optimize response. Brands with large databases, brands that sell in multiple channels, and new spinoff titles are a few examples.

If a brand launches a new specialty title (such as children’s clothing or women’s large size apparel), use additional variables to narrow the target audience. Including select criteria such as product purchase category, product size, or gender, will increase the likelihood of reaching the right audience. The buyer that purchased infant toys or infant apparel a year ago might be your new target for the logical expansion into toddler apparel.

Similarly, launching a women’s apparel catalog for sizes 14+ will require segmentation that goes beyond traditional RFM. Effective segmentation is more than just applying criteria to select an audience. Sometimes suppressing records can be an effective segmentation strategy too. Consider suppressing buyers who purchased apparel in size 8 and under. Segment and test size 10 and 12 apparel buyers. Buyers with prior purchases of sizes 16 and up would comprise another segment.

Sophisticated brands can also leverage page views to optimize segmentation. Toy buyers with extensive browse behavior (but no purchases) of plus-size apparel would be another distinct group to segment and test.

These days, it’s quite common to test purchase channel in RFM segmentation. Direct mail campaigns often reveal huge differences in both response rate and average order when Amazon, online, and phone/mail channels are coded separately. Testing and confirming your assumptions will enable you to suppress specific channels from future catalog campaigns, while providing clear evidence that your circulation strategy will improve profits and save expenses.

Segmentation helps you allocate your marketing budget more efficiently.

There is often tremendous pressure to manage expenses by decreasing catalog circulation. By identifying high-value segments that have a greater likelihood of responding to your catalogs, you can focus your efforts on these segments, mailing fewer catalogs at a greater profit. Make sure to re-allocate your print savings to an initiative that either delivers a high ROI, or is important for continued business growth. Often this is customer acquisition. Brands with low customer retention rates need to constantly replenish the active buyer file.

Effective segmentation improves current and future results.

How? By helping you track and analyze the performance of your catalog campaigns in a meaningful way. By comparing catalog results across different segments, you can gain valuable insights into customer behavior. Using the plus-size catalog example above, segmenting by apparel size and by online browsing interest will help you refine future targeting strategies, and identify opportunities for expansion.

In today’s cost-conscious environment, successful catalog marketing must deliver relevant direct mail campaigns to customers. By employing effective segmentation strategies, you can achieve precisely that. Enhanced relevance, optimized budget spend, key learnings, and improved campaign performance are just a few of the benefits that segmentation brings to your catalog marketing efforts.

Leverage your database and use segmentation to keep optimizing your catalog results!